13 February 2013

Obama and the Pirates

Everything in this column will be established by logical proof,
as in geometry. There will be no name calling, or mere
assertion.

You probably heard again last night that President Obama still
thinks “the rich,” a crass term implying low class social envy, do
not pay their “fair share.” He has been barnstorming America saying
precisely that for his more than four years in office now. But the
indisputable facts from official government sources say
otherwise.

Internal Revenue Service (IRS) data, compiled from income tax
returns, as reported by the Congressional Budget Office (CBO) shows
that in 2009 the top 1% of income earners paid 39% of all federal
income taxes. That was three times their share of national income
at 13%. It was also more than double the 17.6% of federal
individual income taxes paid by the top 1% when President Reagan
entered office in 1981, and all the historic tax rate cutting
began.

Yet, the IRS data also shows that in 2009 the middle class, as
represented by the middle 20% of income earners, paid just 2.7% of
all federal income taxes as a group on net, while earning 15% of
the national income. As a result, the top 1% paid almost 15 times
as much in federal income taxes as the entire middle 20%, even
though the middle 20% earned more income.

And this was before all the tax rate increases on “the rich” at
the beginning of this year. With the expiration of the Bush tax
cuts only for “the rich,” and the Obamacare tax increases going
into effect, top federal income tax rates on the rich rose nearly
20%, the tax rate on capital gains rose nearly 60%, the tax rate on
dividends rose nearly 60%, the Medicare payroll tax rate rose 62%,
and the death tax was permanently restored.

Moreover, the bottom 40% of income earners as a group
on net, instead of paying some taxes to support government
programs, services and benefits, were paid cash by the IRS in 2009
equal to 10% of all federal income taxes that year.

The official IRS data also shows that in 2009 the top 20% of
income earners, which included those earning more than $74,000,
paid 94% of federal individual income taxes. That was 85% more than
the share of national income they earned, almost double. The
selfish bastards in that top 20% earned just over half of all the
income in the country at 51%. Is it fair that they earn so much
more than the bottom 20%, which earned almost nothing? Well, I
guess that’s what happens when the top 20% includes nearly 6 times
as many full time workers as the bottom 20%.

Marxist Principles

Any normal American
would say that such an income tax system is more than fair, or that
“the rich” actually pay more than their fair share. So what is
wrong with President Obama? Why does he keep saying that the rich
do not pay their fair share? Is he ignorant? Wouldn’t somebody in
his Administration tell him that his own Administration’s data show
otherwise?

President Obama’s belief that “the rich” still do not pay their
fair share can only be explained on the basis of Marxist
principles. To a Marxist, the top 1% earning anything more than the
middle class is not fair, no matter how they earned it, fairly or
not. So “the rich” are not paying their fair share as long as they
are left with more than they “need,” as in a true communist system.
This is the only logical explanation of Obama’s rhetoric, and it is
fully consistent with Obama’s entire background, and his own
published writings.

Notice that Obama kept saying that “the rich” don’t need the
Bush tax cuts. That rhetoric follows the most basic Marxist
principle, “From each according to his ability, to each according
to his need.”

For anyone who insists that Obama is only a liberal, and not a
Marxist, what is your explanation of why Obama persists in saying
that “the rich” do not pay their fair share, in the face of the
overwhelming official data to the contrary? Are you saying he is
stupid? The best that can be said for Obama is that anyone who
thinks we should increase federal income taxes on “the rich” still
more is maybe a pirate rather than a Marxist. Perhaps the Obama
logo should be replaced by a skull and crossbones, with a tricorner
pirate hat on top.

Bad Karma for the Middle Class, Working People, and the
Poor

Good tax policy is guided by what
is necessary to maximize economic growth, not by what individual
taxpayers may “need.” The middle class, working people and the poor
benefit far more from economic growth than they ever could hope to
from redistribution. That is proved by the entire 20th century,
where the standard of living of American workers increased by more
than 7 times, through sustained, rapid economic growth.

Workers could never have gained by 7 times by pirating still
more from “the rich.” Raising all tax rates on savings and
investment, as under President Obama’s tax policy, to increase
government benefits for those not working, is a perfect formula for
plummeting not increasing living standards. Savings and investment
to create new businesses, or expand existing businesses, is the
foundation for the creation of jobs. It is also the foundation for
increasing wages and incomes for the middle class, working people,
and the poor.

New capital equipment financed by new savings and investment
increases the productivity of workers. Workers are far more
productive with computerized, mechanized, steam shovels, for
example, than with mere hand shovels. That increased productivity
provides the funds to pay workers more. The increased demand for
labor resulting from that increased savings and investment also
bids up the wages of working people to the level of their
productivity. This just shows that under capitalism, capital and
labor are complementary, not adversarial, exactly contrary to the
misunderstanding of Marxists.

Increasing marginal tax rates on savings and investment,
however, will mean less of it, not more. The result will be fewer
jobs, and lower wages, which is just what we have experienced so
far under President Obama. During Obama’s first term, unemployment
was over 8% and above for the longest period since the Great
Depression, and that only begins to illustrate the Obama
unemployment crisis. Moreover, despite all of Obama’s rhetoric
championing the middle class, median household incomes declined by
7.3% (a month’s worth of wages) during his first term, even faster
after the recession supposedly ended in 2009.

And increasing benefits for not working only pays people more
for not working and not contributing to the economy. All of this
will only get worse in Obama’s unearned second term. The long-term
result will be economic stagnation, not rapidly increasing living
standards, as in all the countries that Obama admires and wants
America to follow.

The American people used to know all of this, which is why they
never voted for redistribution over economic growth in the past,
whenever they were given a well-articulated choice.

The Mentally Feeble Left

The
Left’s big counterargument to these demonstrated facts is that they
only cover the federal income tax. They don’t count the Social
Security and Medicare payroll tax, which all working people pay of
at all income levels, and which the rich do not pay on all of their
income, like most workers.

But it is the federal income tax that President Obama has been
arguing should be increased because the rich don’t pay their fair
share, not payroll taxes. So it is reasonable and relevant to look
at what share of federal income taxes “the rich” are already
paying.

Moreover, the Left is again grievously in error in thinking the
maximum taxable income for the Social Security payroll tax of
$113,700 is a loophole for the rich. Social Security benefits are
calculated based on the worker’s income history. Only the
income on which the worker paid taxes is counted.

So the limit is not an unfair loophole. Workers don’t pay taxes
on income above the limit, but they don’t get benefits for that
income either. That is because Social Security is a contributory
program that only replaces a floor of wage income in retirement.
Once your retirement income is above that floor, there is no good
reason to force taxpayers to pay more for higher benefits. That is
especially because Social Security pays such poor, below market
returns on tax payments into the program, actually negative real
returns for higher income workers. So why force a worker to pay
more for a negative real rate of return. It doesn’t help to close
the long run Social Security deficit, because more benefits would
be owed in the future in return.

But let’s humor the little communists, and look at the relative
shares paid for all federal taxes. Again according to official IRS
data, in 2009 the top 1% paid over 22% of all federal taxes, while
earning 13% of the income. That is down under Obama from the nearly
27% of all federal taxes paid by the top 1% achieved by Reaganomics
in 2007.

President Obama also continues to promote the illiterate false
narrative that the rich pay lower tax rates than the
middle class, along with his trained seal sidekick Warren Buffett.
But the IRS again reports that in 2009 the top 20% paid nearly 70%
of all federal taxes, while earning 50% of the income. The middle
20%, the true middle class, paid 9% of federal taxes, compared to
their 15% share of income. The top 1% alone paid well over twice
the total federal taxes as the entire middle 20%, while earning
less in income. The bottom 20% paid 0.3% of all federal taxes.

America’s Marxist Party

But it is not
just Barack Obama. It is the entire Democrat party that has been
taken over by Marxists.

Obama represents the heart and soul of the Democrats, whose
enthusiasts wear Che Guevara T-shirts sold at their major
gatherings. Look at Nancy Pelosi, just as zanily ultraleft as
Obama, reelected as Democrat House leader, right after the voters
punished House Democrats with a New Deal size 63-seat loss in 2010.
Pelosi makes Sarah Palin look like a rocket scientist when she
tells us that unemployment insurance benefits are one of the most
effective pro-growth policies possible. Why not put everyone on
permanent unemployment benefits then? What a tragedy it is then
when someone gets a job and gets off unemployment benefits.

The reelection of Pelosi to this post was considered by the
Democrats to be fair punishment of the stupid voters who made the
grievous mistake in 2010 in voting to restore the Republicans to
the House majority. Punishment it was.

Or listen to Minnesota Democrat Congressman Keith Ellison talk
about how fair it is for 63% of the income of professional golfer
Phil Mickelson to be seized in taxes. Ellison already campaigns in
a tricorner pirate hat. Or listen to openly communist Democrat
Congressman Alan Grayson from Orlando.

This and more is what your friends and neighbors are
contributing to and voting for when they support the Democrat
party. They are effectively engaged in a personal assault on you
and your family, or at least on your freedom and prosperity, in
attempting to turn this most prosperous and successful country in
world history into just another banana republic.